Chicago | Reuters — U.S. live cattle futures edged higher on Tuesday, lifted by technical buying and short-covering tied to recent gains in wholesale beef prices, traders and analysts said.
But cattle failed to surpass the one-month highs reached on Thursday, triggering concerns the rally that started at the end of April was running out of steam.
“Some people are weary of demand not really being there after this holiday,” said Tim Hackbarth, a cattle broker at the Zaner Group.
Grocers have been buying meat ahead of the U.S. Memorial Day holiday on May 30, the unofficial start of the summer grilling season. Wholesale beef prices have surged to the highest levels since April 21 due to the buying, underpinning cattle prices.
Most-active Chicago Mercantile Exchange June live cattle futures settled 0.3 cent higher at 123.325 cents/lb., below the May 12 peak of 124.675 (all figures US$).
Feeder cattle futures also were consolidating near recent highs, with most-active August feeders finishing up 1.05 cents at 148.775 cents/lb.
“I want a close price over those levels, and then the trade will get excited,” Hackbarth added.
Open interest in live cattle during the recent rally has declined to the lowest since early January, suggesting investors were liquidating positions, not making new long bets, CME Group data showed.
Lean hogs were mixed as investors added to bear-spreads on bets of tighter U.S. hog supplies this summer. Front-month June hogs settled 0.275 cent lower at 82.75 cents/lb. Meanwhile, the July and August hogs contracts each set lifetime highs, before trimming gains slightly.
Hogs have been buoyed just like cattle by rising wholesale meat prices and holiday-related grocer buying.
Dennis Smith, broker at Archer Financial Services, said profit margins from pork packers have eased slightly in recent days. “Margins have been sliced in half. That’s a bullish sign that supplies are tightening,” he said.
— Michael Hirtzer reports on ag commodity markets for Reuters from Chicago.